The relationship between earnings volatility and dividend pay-out of firms quoted at the Nairobi securities exchange

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Abstract

The study was undertaken to examine the relationship between Earnings Volatility and
Dividend Pay-out of companies listed at the Nairobi Securities Exchange (NSE). A
sample of forty two companies listed continuously from January two thousand and eight
to December two thousand and thirteen at the Nairobi Securities Exchange. Companies
from all the segments of the market were considered. Multiple linear regression analysis
was used to establish the relationship. Dividend pay-out (PO) was the dependent variable
while earnings volatility (EVO) was the explanatory variable. Financial leverage (LEV),
firm size (SIZ) and company growth (GRO) rate were used as control variables. The
study showed that there was a negative significant relationship between Earnings
Volatility and Dividend Pay-out of firms quoted at the Nairobi Securities Exchange
(NSE). It was also found that there were other variables significantly correlated with
dividend pay-out